Textile Industry Should Actively Cope With The Pressure Of RMB Appreciation

In July 20th, the central parity of the RMB against the US dollar was 6.4592, once again set a new high after the reform. Since this year, with the increasing inflation pressure, the economic growth rate has been slowing down. The RMB exchange rate has reached a new high, which has undoubtedly increased the pressure on the textile industry this year.

In a sense, the appreciation of RMB means that the price competitiveness of China's textile products will decline.

The research shows that the sales profit margin of the textile industry will decrease by 2%~6% if the value of RMB rises by 1%.

If the renminbi appreciated by 5%~10%, the industry profit margin would drop by 10%~60%.

Therefore, the appreciation of the renminbi will have a major impact on China's textile industry, which relies mainly on exports.

Price advantage weakened.

The appreciation of the renminbi will increase the export cost of textiles, and it is necessary for enterprises to raise the prices of export products if they want to maintain certain profits.

As far as SMEs are concerned, raising prices is bound to weaken their competitive advantage in the international market, which will result in certain restraint on exports and thus reduce the volume of textile exports.

Competition will become more intense.

RMB exchange rate adjustment

Small and medium-sized enterprises will be struggling.

China's textile exports are mostly small and medium-sized private enterprises.

Because of their own strength, brand effect, marketing strategy and other defects, a large part of these enterprises will be in a significant inferior position in the fierce international competition in the future, and will be faced with the danger of being eliminated.

The appreciation of the renminbi will significantly increase the labor cost of the enterprises, so that the coastal textile enterprises are forced to move to the inland areas with lower labor costs, thus breaking the existing industry pattern.

This could be a more fatal blow to it.

The export efficiency of enterprises has been significantly reduced.

After the appreciation of the renminbi, the price of export products represented by foreign currency, such as keeping the international market price unchanged, means reducing export profits.

In fact, many foreign trade enterprises basically raise their prices to cope with the change of exchange rate in order to maintain their small export profits.

But not most enterprises can raise their prices as they wish. At present, it is more difficult for foreign customers to fully assume the cost of RMB appreciation by raising prices.

The author believes that in the case of adverse effects of RMB appreciation, the textile industry should accelerate.